Smart Investor: Bank Earnings, Index ETFs, and Quantum Computing Stocks
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In this week’s newsletter:
It was another bumpy week for the markets. Stocks appeared to shrug off a fresh threat to the Federal Reserve’s independence on Monday, but they declined sharply mid-week as the tech sector faltered. The market gained back ground on Thursday but ended the week with losses of 0.25%. Declines were led by financials and communication services, offset by gains in real estate and consumer defensives.
The fourth-quarter earnings season got underway this week, as big banks reported their results just days after President Donald Trump floated a 10% cap on credit card interest rates in a social media post. CEOs from Bank of America, Citigroup, and more warned that the cap would harm borrowers and the economy in addition to banks’ and card issuers’ bottom lines.
Shares of Alphabet surged past the $4 trillion milestone this week, bucking the broader downward trend in tech stocks since the start of the year. Gabe Alpert screened for the funds with the largest positions in that stock. Meanwhile, Bella Albrecht updated our screens of new 4-star and 5-star stocks. Coca-Cola, Fair Isaac, and Crown Castle International made the cut.
On the economic front, Consumer Price Index data released Tuesday showed that inflation continued to moderate in December. However, Morningstar senior US economist Preston Caldwell expects a reacceleration in 2026 as businesses pass on more tariff-related costs to consumers.
Meanwhile, Bryan Armour took a deep dive into index ETFs. His takeaway for investors: Aim for index ETFs with low fees rather than the hot, expensive strategies that may fizzle out.
Lastly, I spoke with Morningstar senior equity research analyst Dan Romanoff about quantum computing stocks. This buzzy technology captured investors’ attention last year, but he warns that the hottest pure-play quantum bets aren’t likely to generate immediate returns based on strong fundamentals. Romanoff thinks investors looking for exposure to quantum computing should turn to the well-resourced, well-positioned cloud providers like Microsoft, Google, Amazon, and IBM.
As always, be sure to visit our Markets page for our latest coverage and live stock market updates, along with our full weekly calendar of key upcoming data and events.
